Nearly 25 million people suffer from end-stage lung disease in the United States with a staggering ~140,000 patients dying each year from chronic obstructive pulmonary disease alone, the third most common cause of death. Lung transplantation - the only definitive treatment for these patients, remains hampered by the severe shortage of donor organs, to the extent that only one out of five donor lungs is used for transplant. The ability to recover rejected/marginal quality donor lungs would radically change the prognosis for thousands of patients awaiting lung transplantation. We propose to use donor human lungs rejected because of acute injury, and selectively remove the lung epithelium in targeted injured regions while preserving the surrounding cells, matrix, basement membranes and lung vasculature. Denuded epithelial regions will then be repopulated by epithelial progenitors derived from human iPSCs, to bioengineer a functional chimeric human lung that meets transplantation criteria. Our hypothesis is that the functional regeneration of acutely injured human lungs ex vivo can be achieved by targeted replacement of lung epithelium in damaged regions of the lung, while preserving intact lung matrix and vasculature, under conditions designed to emulate prenatal lung development. To test this hypothesis, we propose three specific aims. Aim 1 is to derive pulmonary cells (putative distal tip progenitors, pDTPs) from iPS cells and to characterize their identity, phenotype and level of maturity. Aim 2 is to investigate regeneration of acutely injured human lungs by replacing the injured lung epithelium with iPSC-derived pulmonary cells, using two models: (i) lung slices cultured in vitro, and (ii) whole human lungs supported with vascular perfusion and air ventilation ex vivo. Aim 3 is to functionally recover the lungs ex vivo, by long-term cross-circulation support (up to 7 days) and bronchial/alveolar infusion of pDTPs, with real-time functional assessment and imaging. These three aims will be pursued in an integrated fashion, with each aim informing the other two aims. The ultimate goal of this proposal is to achieve functional recovery of donor lungs rejected for transplantation by combining four major innovative components: (1) Derivation of effectively unlimited numbers of epithelial lung progenitors (pDTPs) from human iPSCs, (2) Selective removal of lung epithelium (the site of most lung damage) while maintaining native lung vasculature (enabling continuous blood perfusion) followed by delivery of pDTPs to the denuded epithelium, (3) Extended duration of ex vivo lung support, from hours to days, by providing metabolic clearance and systemic factors to the perfused and ventilated lung, and (4) Implementation of real-time theranostic (diagnostic + therapeutic) imaging during ex vivo lung recovery.